HHS awarded $243M for debt collection services to CNI Administration Services, LLC, with no competition

Contract Overview

Contract Amount: $243,270,963 ($243.3M)

Contractor: CNI Administration Services, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2006-08-15

End Date: 2012-10-30

Contract Duration: 2,268 days

Daily Burn Rate: $107.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Official Description: DEBT COLLECTION SERVICES

Place of Performance

Location: ALBUQUERQUE, BERNALILLO County, NEW MEXICO, 87109

State: New Mexico Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $243.3 million to CNI ADMINISTRATION SERVICES, LLC for work described as: DEBT COLLECTION SERVICES Key points: 1. The contract's value of over $243 million over its duration suggests a significant need for debt collection services within CMS. 2. The lack of competition raises concerns about potential overpayment and the absence of market-driven price discovery. 3. The contract's long duration (over 6 years) and cost-plus award fee structure may incentivize cost escalation. 4. Performance context is limited without specific metrics on collection rates or efficiency. 5. This contract falls within the administrative and support services sector for healthcare.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of publicly available data on comparable debt collection services for federal agencies. The cost-plus award fee (CPAF) pricing structure, while allowing for flexibility, can sometimes lead to higher costs compared to fixed-price contracts if not managed rigorously. Without specific performance metrics or comparisons to industry standards for debt recovery rates and associated costs, it's difficult to definitively assess value for money. The total award amount of $243 million over approximately 6 years suggests a substantial ongoing need.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach bypasses the standard procurement process where multiple companies would bid, potentially leading to lower prices and better terms through competition. The justification for a sole-source award is not provided in the data, which is a critical piece of information for understanding why competition was bypassed.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. It also limits opportunities for other qualified businesses to secure government contracts.

Public Impact

Beneficiaries include the Centers for Medicare and Medicaid Services (CMS) in their efforts to recover outstanding debts. Services delivered involve claims adjusting and debt collection activities. The geographic impact is likely nationwide, given the scope of CMS operations. Workforce implications are primarily for the contractor, CNI Administration Services, LLC, and potentially for CMS staff overseeing the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a contract of this magnitude raises concerns about price reasonableness and potential for inflated costs.
The cost-plus award fee structure, without clear performance benchmarks, could incentivize increased spending rather than efficiency.
The long contract duration might indicate a lack of market exploration for more cost-effective solutions or a reliance on a single provider.
Limited transparency regarding the justification for the sole-source award hinders a full assessment of its necessity.
Absence of specific performance metrics makes it difficult to evaluate the effectiveness and efficiency of the debt collection services provided.

Positive Signals

The contract addresses a critical function for CMS: the recovery of outstanding debts, which is essential for program integrity and financial health.
CNI Administration Services, LLC has been awarded a significant contract, indicating a level of trust or established relationship with the agency.
The contract's duration suggests a stable, long-term need for these services, potentially leading to specialized expertise development by the contractor.

Sector Analysis

This contract falls within the administrative and support services sector, specifically focusing on debt collection for a government healthcare agency. The market for government debt collection services is competitive, but often involves specialized firms with experience navigating federal regulations. Comparable spending benchmarks are difficult to establish without more specific details on the types of debt being collected and the recovery rates achieved. However, the sheer size of this award suggests it represents a substantial portion of CMS's spending in this niche area.

Small Business Impact

The provided data indicates that small business participation (sb) was false and the contract was not set aside for small businesses (ss). This suggests that CNI Administration Services, LLC is likely a large business. There is no information on subcontracting plans or the impact on the small business ecosystem for this specific contract.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the contracting officer's representative (COR) at CMS, who is responsible for monitoring performance and ensuring compliance with contract terms. The Inspector General's office for the Department of Health and Human Services (HHS) would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract. Transparency is limited by the sole-source nature of the award and the lack of detailed performance reporting in the public domain.

Related Government Programs

Federal Debt Collection
Healthcare Claims Processing
Administrative Services
Government Contracting
Centers for Medicare and Medicaid Services Programs

Risk Flags

Sole-source award without clear justification
Potential for uncompetitive pricing
Lack of performance metrics in public data
Cost-plus award fee structure without defined performance incentives

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $243.3 million to CNI ADMINISTRATION SERVICES, LLC. DEBT COLLECTION SERVICES

Who is the contractor on this award?

The obligated recipient is CNI ADMINISTRATION SERVICES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $243.3 million.

What is the period of performance?

Start: 2006-08-15. End: 2012-10-30.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for awarding this contract on a sole-source basis. Typically, sole-source awards are made when only one responsible source is available or capable of providing the required services, or in cases of urgent and compelling need. Without this justification, it is impossible to assess whether competition was appropriately bypassed or if alternative solutions were adequately explored. This lack of transparency is a significant concern for ensuring fair and efficient use of taxpayer funds.

What are the key performance indicators (KPIs) and targets for CNI Administration Services, LLC under this contract?

The provided data does not specify the key performance indicators (KPIs) or targets for CNI Administration Services, LLC. For a contract of this magnitude and duration, especially one with a Cost Plus Award Fee (CPAF) structure, clearly defined KPIs are crucial for measuring success and determining award fees. These KPIs would likely include metrics related to debt recovery rates, cost per dollar collected, timeliness of collections, compliance with regulations, and customer service standards. The absence of this information makes it difficult to evaluate the contractor's performance and the overall value delivered.

How does the cost-plus award fee (CPAF) structure compare to other potential contract types for debt collection services?

The Cost-Plus Award Fee (CPAF) structure allows the contractor to be reimbursed for allowable costs plus a fee that is determined based on performance against pre-defined criteria. For debt collection services, this structure can incentivize the contractor to maximize collections to earn a higher award fee. However, it also carries the risk of cost overruns if costs are not managed effectively, as the government bears the cost risk. Compared to fixed-price contracts, CPAF offers more flexibility but potentially less cost certainty. For debt collection, performance-based fixed-fee contracts or even contingency fee arrangements (where payment is a percentage of recovered debt) might offer greater cost control for the government, depending on the specific services required and the nature of the debt.

What is the historical spending trend for debt collection services by CMS?

The provided data only pertains to a single contract awarded in 2006 and ending in 2012, totaling $243 million. It does not provide historical spending trends for debt collection services by CMS. To understand historical spending, one would need to analyze contract awards over multiple years, looking at the total value of debt collection contracts, the number of awarded contracts, and the agencies or departments responsible for these procurements. This would help identify patterns, changes in spending, and the overall market dynamics for these services over time.

What is the track record of CNI Administration Services, LLC in performing similar government contracts?

The data indicates that CNI Administration Services, LLC was awarded this specific $243 million contract by the Department of Health and Human Services (HHS) for debt collection services. While the award of such a large contract suggests some level of capability and past performance, the provided data does not offer details on their broader track record, including performance on other government contracts, client satisfaction, or any past issues or successes. A comprehensive assessment of their track record would require reviewing their contract history across various agencies and contract types.

Industry Classification

NAICS: Finance and Insurance › Agencies, Brokerages, and Other Insurance Related Activities › Claims Adjusting

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: RFPCMS20060005

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Chickasaw Nation

Address: 4411 THE 25 WAY NE STE 200, ALBUQUERQUE, NM, 87109

Business Categories: 8(a) Program Participant, Category Business, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations

Financial Breakdown

Contract Ceiling: $243,270,963

Exercised Options: $243,270,963

Current Obligation: $243,270,963

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Timeline